The guidelines, which will be the minimum requirements that will be prescribed by clearing corporations for warehousing service providers, are aimed at bringing uniformity, improve ease of doing business and rationalise regulatory compliance cost, among other aspects.
In a circular, Sebi said the guidelines would come into effect from June 1, 2021.
According to the regulator, the prescribed norms are the minimum requirements/ standards which a clearing corporation will set out for compliance by its accredited WSPs (Warehouse Service Providers) and assayers.
Compliance has to be ensured in conjunction with the norms laid down by Warehousing Development and Regulatory Authority or any other government authority overseeing the warehousing or storage infrastructure and its ancillary services for the respective goods, Sebi noted.
A WSP is an entity which provides a storage facility for storing underlying goods related to a commodity derivatives contract.
“The clearing corporations shall have necessary arrangements to ensure that in the event of bankruptcy or insolvency of the WSP or other such contingency, there must be no restrictions placed upon owners/ depositors of the commodity desiring to take possession of their individually identified commodity and remove it from the accredited warehouse(s),” Sebi said.
A WSP can be accredited with more than one clearing corporation and clearing corporations cannot mandate that its WSP cannot provide services to other such corporations. An accredited WSP should have a minimum subscribed and paid-up share capital of Rs 10 crore.
As per Sebi, the promoter or promoter groups of a WSP should be in the business of public warehousing for at least three years and a clearing corporation can relax the requirement, subject to certain conditions.
The regulator noted that net worth requirements vary for agricultural/agri-processed, base/industrial metals and composite goods. A WSP may be given six months to augment the net worth in case of reduction below stipulated requirement.
If a WSP is still unable to augment the net worth, clearing corporations should ensure that the WSP does not carry out any new business related to commodity derivatives market.
“The value of the goods stored in the accredited storage facilities of WSP shall not, at any point of time, exceed 33 times the net worth of the WSP, irrespective of the number of clearing corporations being served by the WSP,” Sebi said.
Clearing corporations should ensure that WSPs comply with Know Your Depositor (KYD) policy under a standard operating procedure that is process-dependent and not person-dependent.
Among other requirements, clearing corporations have to review and appraise operational performance of each WSP every year and frame code of conduct for the WSPs, storage facilities and assayers, as per the circular.
Sebi has also listed out the disclosures that WSPs need to make to the clearing corporations and specified guidelines for security deposit, financial security deposit and corporate governance norms for WSPs.
Further, a clearing corporation should ensure that it has a grievance cell to handle the investor complaints and shall take proactive steps to resolve the complaints.
Clearing corporations should ensure that to the extent possible, a WSP to be accredited by them has adopted or should adopt the latest technology with respect to the operations of the warehousing business.
The guidelines for warehousing norms are for goods underlying a commodity derivatives contract having the feature of physical delivery.
